link to page 1 link to page 1 link to page 1 link to page 1 link to page 1


June 1, 2016
The Gender Earnings Gap
Women earn less, on average, than men. This earnings
Table 1. Select Worker Characteristics, by Sex
differential—often called the gender earnings gap—is a
significant concern for policymakers, and it raises questions

Men
Women
about gender equity in labor markets as well as the
Worker Characteristics 1981
2011
1981 2011
implications of the gap for national economic performance.
Schooling (Years)
13.3
14.3
13.2
14.5
Figure 1. Ratio of Women’s to Men’s Median Annual
Earnings, 1964-2014

Full-time Work Experience
20.3
17.8
13.5
16.4
Full-time, Year-Round Workers
(Years)
Share of Workers in
21.5%
18.3%
9.2%
16.2%
Managerial Jobs
Share of Workers in
14.6%
18.6%
10.1%
17.8%
Professional Jobs, Excluding
Nurses and Teachers
Source: Francine D. Blau and Lawrence M. Kahn, The Gender Wage
Gap: Extent, Trends, and Explanations
, National Bureau of Economic
Research, Working Paper no. 21913, Tables 2 and 3, January 2016,

http://www.nber.org/papers/w21913.
Source: U.S. Census Bureau, Historical Income Tables, Table P-40,
Note: Blau and Kahn use data from the Panel Study of Income
at http://www.census.gov/hhes/www/income/data/historical/people/
Dynamics, and restrict analysis to full-time non-farm wage and salary
Note: A full-time, year-round worker is a person who worked 35 or
workers, aged 25-64, with at least 26 weeks of employment.
more hours per week and 50 or more weeks during the previous
calendar year.
Researchers have applied statistical techniques to large-
scale survey data to separate the observed earnings gap
Figure 1 plots the ratio of women’s to men’s annual
(e.g., as shown in Figure 1) into its explained and
median earnings from 1964 to 2014, using U.S. Census
unexplained portions.
Bureau data. This ratio is a summary measure of the gender
earnings gap, which in practice takes on a range of values
The explained portion accounts for observed gender
that vary across occupations and worker characteristics.
differences in factors that affect wages (e.g., education,
Nonetheless, Figure 1 illustrates several points of interest:
occupation, work experience), assuming that those
attributes are equally valued for men and women (i.e.,
 Women’s median annual earnings are lower than
an MBA has the same value to an employer regardless
men’s throughout the entire 1964-2014 period;
of the degree-holder’s sex).
 The ratio of women’s-to-men’s median annual
The unexplained portion is the gap that remains when
earnings rose rapidly in the 1980s and 1990s;
observed characteristics are taken into account (i.e., it is
the portion of the gap that cannot be explained by
 The ratio continued to rise in recent years, but at a
observed differences in education, work experience, or
slower pace;
other worker characteristics).
 In 2014, women’s median annual earnings were
One interpretation of the unexplained gap is that it
78.6% of men’s, representing a 21.4 percentage
measures sex-based discrimination. Although research
point gap.
suggests discrimination is a component, the unexplained
gap plausibly measures the impacts of many factors. This is
The Explained and Unexplained Gap
because all surveys that have been used to estimate the
Part of the earnings gap shown in Figure 1 can be
explained and unexplained earnings gaps are limited in their
attributed to differences between men’s and women’s
capacity to fully capture worker attributes that could affect
employment patterns and other characteristics. Table 1, for
earnings. For example, although most surveys collect
example, illustrates select differences between men’s and
information on employment, occupation and industry of
women’s years of education, full-time work experience, and
work, work hours, and wages, many individual
occupations in 1981 and 2011. It shows that differences
characteristics (e.g., technical knowledge, competitiveness,
remain in 2011, but these have narrowed considerably since
interpersonal skills) and employer-specific attributes (e.g.,
1981.
job features and requirements, provision of classroom
training and mentoring) are frequently unmeasured. As a
https://crsreports.congress.gov

The Gender Earnings Gap
result, the unexplained portion of the wage gap—as
persistence of gender stereotypes may matter to women’s
conventionally measured—will capture many things,
relative pay.
including, potentially, unmeasured worker characteristics
that affect productivity, worker preferences for job
Preferences for Flexible Work Schedules: A greater
amenities, differences in workers’ bargaining power, and
preference for flexible work arrangements among women
discriminatory labor practices.
(e.g., in terms of where the work is performed, the number
of hours, and when those hours may be worked) may
The Explained Gap: Significant Factors
explain a portion of the pay gap if workers who value such
A vast literature has examined the determinants of the
flexibility are willing to accept lower monetary
gender earnings gap. Although there are many contributing
compensation in exchange. This theory is consistent with
factors, and their relative significance have shifted over
recent research on gender earnings differentials within high-
time, career interruptions and occupation differences stand
paying occupations. These findings suggest that providing
out.
work-hour flexibility is costly for some employers, and
consequently working long hours and particular hours
Career Interruptions: On average, women tend to
receives a wage premium (e.g., two hours worked from 6 to
interrupt their careers more so than men. The frequency and
8 p.m. in the office is worth more to the employer and
duration of interruptions have changed over time, but—as
compensated at a higher rate than two hours worked from 9
shown in Table 1—women have fewer years of full-time
to 11 p.m. at home). Moreover, as demand for work-time
work, on average, than do men. Interruptions can affect
flexibility increases—among both male and female
women’s earnings through several channels. Workers who
workers—the “price” of flexibility may rise, putting
switch employers after a break from employment will lose
additional downward pressure on wages.
job-specific knowledge and training; in addition, workers
may trade monetary compensation for desirable job features
Wage Negotiation: Recent studies of specific worker
(e.g., work environment, flexible scheduling, additional
groups (e.g., investment bankers at a single firm, MBA
training) when returning to work. Long absences may cause
students) have documented differences in men’s and
certain skills or job networks to depreciate, temporarily
women’s propensity to negotiate compensation. At the
curtailing wages while these are reestablished. Finally,
same time, there is some indication that negotiation by
some employers may interpret an interruption as a signal of
female employees may be less effective. A small collection
low labor market commitment, resulting in more
of experimental studies—that is, conducted in a controlled
challenging job search or lower wage offers.
environment, not analysis of actual employers—suggests
that women who negotiate wage offers are seen as less
Occupation: Although occupational-segregation has
desirable job candidates than those who accept opening
diminished considerably over the past thirty years, women
offers.
and men—as groups—continue to concentrate their
employment in different occupations, and this remains an
Discrimination: Research that explores sex-based
important source of the gender earnings gap. There are
compensation discrimination tends to restrict analyses to
various theories about why this may be the case, including
narrowly defined groups (e.g., lawyers, MBAs), where
that women may select into jobs that they can more easily
there are fewer differences between the attributes of male
return to after a temporary career interruption (e.g., for
and female workers. Some of these—but not all—reveal
family reasons or if a household relocates) or that women
that pay differences remain after taking into account a
face additional barriers to employment in certain fields.
multitude of factors, a finding consistent with the view that
Relative to women, men are better represented in certain
discrimination contributes to the earnings gap.
higher-paying occupations like managerial jobs and
historically male professional jobs (e.g., professional jobs
Where it exists, sex-based discrimination may not be based
other than nurses and K-12 educators). For example,
on employers’ distaste for hiring women. Instead, when
Bureau of Labor Statistics data show that, while women
employers are uncertain about the productive capacity or
made up 44.2% of all full-time wage and salary workers in
workforce commitment of an individual worker, they may
2014, they made up 26.3% of chief executives ($2,023
rely on information or perceptions about group differences
median weekly earnings), and 80.4% of elementary and
when making hiring, training, or other decisions.
middle school teachers ($980 median weekly earnings).
Economists refer to this practice as statistical
discrimination
. Some experimental studies—conducted
Exploring the Unexplained Gap
both in laboratories and in labor markets—detect gender-
Given the limits of large-scale survey data, researchers have
stereotyping that may put women at relative disadvantage in
used smaller-scale studies, often on special worker groups
hiring and wage offers under certain conditions. For a
(e.g., specific occupations) to explore the determinants of
discussion of major laws directed at eliminating sex-based
the unexplained earnings gap. The literature has also
discrimination and recent proposals, see CRS Report
evolved to consider the impact of less tangible worker skills
RL31867, Pay Equity: Legislative and Legal Developments,
and traits—like interpersonal skills, risk-aversion,
by Jody Feder and Benjamin Collins.
competitiveness, and self-esteem—that are important to
workers’ performance and career path. A few prominent
Sarah A. Donovan, Analyst in Labor Policy
findings suggest that preferences for flexible work
schedules, differences in wage negotiation, and the
IF10414
https://crsreports.congress.gov

The Gender Earnings Gap


Disclaimer
This document was prepared by the Congressional Research Service (CRS). CRS serves as nonpartisan shared staff to
congressional committees and Members of Congress. It operates solely at the behest of and under the direction of Congress.
Information in a CRS Report should not be relied upon for purposes other than public understanding of information that has
been provided by CRS to Members of Congress in connection with CRS’s institutional role. CRS Reports, as a work of the
United States Government, are not subject to copyright protection in the United States. Any CRS Report may be
reproduced and distributed in its entirety without permission from CRS. However, as a CRS Report may include
copyrighted images or material from a third party, you may need to obtain the permission of the copyright holder if you
wish to copy or otherwise use copyrighted material.

https://crsreports.congress.gov | IF10414 · VERSION 2 · NEW